GST to be marginally beneficial for steel industry; NPA resolution depends on pick up in steel demand & prices

The Union Government has categorically stated that though it is willing to provide protection to the domestic pipe manufacturers against unfair trade practices, the industry must also act responsibly, a top Steel Ministry official said at an ASSOCHAM event.

While we are willing to give protection, it comes with a sense of responsibility so please be very-very responsible, charges of cartelisation then become very-very difficult to fend off as prices start rising dramatically, said Mr Syedain Abbasi, joint secretary, Ministry of Steel.

Stating that it is not in government's interest to buy steel at prices which are very-very high, Mr Abbasi said, Then if people gather and say that look these controls have to go then ultimately it will be the pipe industry which will be the loser.

He urged the pipe industry to look at it very hard and very carefully. We want to provide you the protection so that you can survive, beyond that if you want to do then you will have to compete in the open market without any protections.

Noting how efforts have been renewed after the new US president took over to limit the import of steel and steel products to a significant extent in to the US, Mr Abbasi said, In such a situation, when stronger economies in the world are looking at protecting their industry, we have to be very clear that our domestic markets also require to be protected against unfair trade practices. That is something, at least in the steel industry, we are very clear about.

He said that after the policy on Domestically Manufactured Iron & Steel Products (DMI&SP) had come there were concerns expressed by the press and by organisations like GAIL, IOC as well as the Petroleum Ministry about a significant hike in prices.

My request would be that while we are willing to provide protection, it would become very-very untenable to us to continue if you suddenly find that the prices in the next tender for GAIL pipeline have gone up by 30 per cent, said Mr Abbasi.

Terming the impact of goods and services tax (GST) on steel industry, 'marginally beneficial,' he said that in raw material - duty will come down by 1-1.5 per cent.

Even in steel products while it is 18 per cent but a lot of double taxation has been moved out then again there will be an impact of 1-1.15 per cent, said Mr Abbasi.

On resolution of non-performing assets (NPAs) in steel sector, he said that it depends not only on GST and DMI&SP but also on pickup in steel demand, prices and other related factors.

Mr Abbasi informed that after the intervention of Prime Minister's Office (PMO) the problems created by the railways in giving 'way leave agreement,' to cross the slurry pipeline either underground or over-head across railway land have abated.

This is again a huge market for pipe manufacturers to exploit and I would request the pipe manufacturers to promote with ministries and state governments as in terms of transportation and logistics this is a far cheaper, environmentally safer and better option, said Mr Abbasi.

This is something which needs to be promoted all across and pipe manufacturers would be doing themselves a disservice if they do not have a strong promotional arm to promote these issues, he added.

He further said that even the Steel Ministry is also working in terms of promotion of steel by looking at replacement of a lot of cement and concrete with steel because it is quicker to implement and in terms of life-cycle costs it is cheaper.

He also highlighted that there has been a constant refrain in the pipe manufacturing industry that capabilities do not exist in the country to manufacture API grade steel or that they are too costly, especially which require X-65 and above.

I would like to assure the pipe manufacturers that there are enough capabilities within the country to manufacture those grades of steel whether it is plates, coils or sheets and we would encourage you to buy from domestic producers, he said.

I assure you that they would be competitive because they also have to compete with global players and though we have ensured that we have given protection under anti-dumping to HR coil and CR coil and others, we have given it at basic grade prices there is easily $100 cushion in terms of what our basic grade are imported at and what is actually the prevailing international price for your API grade, so you would find them receptive to being competitive, added Mr Abbasi.

On the slurry pipelines, he said that if you look at what is going to happen in the steel industry, India is poised for enormous growth. Across the globe, the only country which is showing significant growth in terms of market is India.

He added that Pipe industry in India has a great future as it has exported enormous quantities of pipes all over the world and the quality of manufacturing is well-known internationally and with renewed stress on infrastructure and Make in India, the best days of pipe industry are ahead of them.

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